On December 31, the end of the first year of operations, Frankenreiter Inc., man

Question

On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 2,700 units and sold 2,300 units. The following income statement was prepared, based on the variable costing concept: Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1 Sales $437,000 Variable cost of goods sold: Variable cost of goods manufactured $245,700 Ending inventory (36,400) Total variable cost of goods sold 209,300 Manufacturing margin $227,700 Total variable selling and administrative expenses 52,900 Contribution margin $174,800 Fixed costs: Fixed manufacturing costs $113,400 Fixed selling and administrative expenses 34,500 Total fixed costs 147,900 Income from operations $26,900

Explanation / Answer

a Variable product cost: Variable cost of goods manufactured 91 =245700/2700 Total 91 b Absorption product cost: Variable cost of goods manufactured 91 Fixed manufacturing costs 42 =113400/2700 Total 133

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